Drawing on the research of competitive dynamics and financial analysts, we investigate how financial analysts’ recommendations of rivals’ stocks drive a focal firm’s competitive actions. Based on a longitudinal analysis of 2,282 public firms from 2000 to 2015, we show that the more positive analysts’ recommendations of rivals’ stocks, the greater the intensity and complexity, but the less the deviation from industry norms, of a focal firm’s competitive repertoire. We also find that these relationships are weakened by analysts’ positive recommendations of the focal firm’s own stocks. Our study contributes to both the competitive dynamics and financial analyst research by taking a rival-centric view to study the link between financial analysts’ recommendations and interfirm rivalry.
